Nutrisystem 2015 Annual Report Download - page 36

Off-Balance Sheet Arrangements
We have no off-balance sheet financing arrangements.
Liquidity, Capital Resources and Other Financial Data
At December 31, 2015, we had working capital of $19.2 million, a decrease of $5.6 million from the $24.8
million working capital balance at December 31, 2014. Cash and cash equivalents at December 31, 2015 were
$6.2 million, a decrease of $6.4 million from the balance of $12.6 million at December 31, 2014. In addition, we
had $9.3 million and $16.6 million invested in short term investments at December 31, 2015 and 2014,
respectively. The decrease in cash, cash equivalents and short term investments was related primarily to the
acquisition of SBD for a cash payment of $15.0 million in December 2015. Our principal sources of liquidity
during 2015 were cash flows from operations.
On November 6, 2015, we entered into a $50.0 million unsecured revolving credit facility with a lender. The
credit facility provides for interest on borrowings at either a base rate or the London Inter-Bank Offered Rate, in
each case plus an applicable margin and is also subject to an unused fee payable quarterly. The credit facility
contains financial and other covenants, including a minimum consolidated fixed charge coverage ratio, if there
are outstanding borrowings, and limitations on, among other things, liens, indebtedness, certain acquisitions,
consolidations and sales of assets. The credit facility can be drawn upon through November 6, 2020, at which
time all amounts must be repaid. This credit facility amended and restated the previous credit agreement dated as
of November 8, 2012, which matured on November 6, 2015. There were no borrowings outstanding at
December 31, 2015 and 2014.
In 2015, we generated cash flow of $31.2 million from operating activities, a decrease of $1.6 million from 2014.
The decrease in cash flow from operations was primarily attributable to net changes in operating assets and
liabilities, including changes in income taxes, an increase in inventories due to increased demand and the
package redesign and an increase in receivables due to increased retail revenue. These decreases in cash flow
were offset by an increase in net income.
In 2015, net cash used in investing activities was $20.8 million primarily from the cash payment of $15.0 million
for the acquisition of SBD and capital additions of $13.0 million offset by the net proceeds from short term
investments of $7.2 million. We are continuing to invest in our ecommerce and web platform and facilities to
incorporate new product initiatives and growth opportunities.
In 2015, net cash used in financing activities was $16.8 million primarily for the payment of dividends partially
offset by increased proceeds from the exercise of stock options.
Our Board of Directors declared quarterly dividends of $0.175 per share, which were paid on March 23,
2015, May 21, 2015, August 20, 2015 and November 19, 2015. Subsequent to December 31, 2015, our Board of
Directors declared a quarterly dividend of $0.175 per share payable on March 17, 2016 to stockholders of record
as of March 7, 2016. Although we intend to continue to pay regular quarterly dividends, the declaration and
payment of future dividends are discretionary and will be subject to quarterly determination by our Board of
Directors following its review of our financial performance.
We believe that our available capital resources are sufficient to fund our working capital requirements, capital
expenditures, income tax obligations and dividends for the foreseeable future.
Seasonality
Typically in the weight loss industry, revenue is greatest in the first calendar quarter and lowest in the fourth
calendar quarter. We believe our business experiences seasonality, driven primarily by the predisposition of
dieters to initiate a diet at certain times of the year and the placement of our advertising, which is based on the
price and availability of certain media at such times.
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